Housing solutions provider Mears has made its scheduled trading update ahead of the financial year ending 31 December.
The group’s statement says trading performance continued in line with the board’s expectations and it has delivered an operating profit during the second half of the financial year. It expects to report total revenues of around £825 million (H1: £407million) for the full year and a small profit before tax (H1: £5.8 million loss).
It says cash performance has been strong in the second half, with the group’s average daily net debt position for the five months to 30 November reducing to £88 million (H1: £121m), also benefiting from a £16 million VAT deferral from the March-20 quarter-end.
Mears says its social housing maintenance operation saw work volumes strengthen steadily through the third quarter, reaching 79 per cent in October (June 2020: 25 per cent) as clients “cautiously extended the scope of works permissible in people’s homes but PPE/social-distancing protocols continued to reduce operative productivity”.
The group adds that it did not see a significant impact on work volumes in November during the second national lockdown and this resilience provides reassurance to the board when looking forward to 2021. Central government contracts continued to perform strongly through the second half, “with the group adapting well to changing service user needs and the higher work levels”.
Outlining strategic developments, Mears says it made “excellent progress” in the second half with the sale of its Scottish Care business for up to £2.5 million. It adds that completion of the sale of data technology firm Terraquest to private equity group Apse Capital for up to £72 million is expected this month and, taking into account the initial cash proceeds, the group is expected to be net cash positive at the year’s end.
The group says it took a strategic decision during the first half to withdraw from around £50 million of annualised maintenance contract revenues that were either underperforming or where no financial support was forthcoming from clients through the first national lockdown. Its central support functions have also been rationalised in proportion to the reduction in revenues. These closures and cost reductions are now complete and expensed during the year, it adds.
In outlook, Mears says that as Covid-related restrictions are likely to persist well into Q1 2021, near term forecasting remains difficult but suggests that “2021 should see the group transition back to more normalised levels”.
David Miles, Mears’ CEO, said: "In common with most businesses, 2020 has been a challenging year for the group, but one the company and particularly its employees have risen to with great fortitude.
“We have also received great support from clients and customers. Despite the challenges, we have continued to provide the highest levels of service, plus made excellent progress on our strategic priorities. We exit the year as a singularly focused housing specialist and trusted partner to local and central government, bringing innovative solutions to help tackle many of the deep-rooted issues within the UK’s social and affordable housing sectors."
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